Galling To Pay Thieves . . .

May 18, 1985

Insult was piled atop injury this week when General Electric Co. agreed to repay $800,000 in phony charges to the Pentagon, got fined $1 million for the fraud -- and then got a new $11 million government contract. That was all in a day's work for the nation's No. 4 defense contractor -- a rip-off here, a wrist slap there, and profits everywhere. It's also business as usual that must be stopped.

As overcharges by defense contractors have been exposed, the Pentagon has offered two exaggerations to excuse its own brazen inaction. The Pentagon has said that it can't afford to stop doing business with contractors that commit fraud. Defense Secretary Caspar Weinberger called the case of General Dynamics -- which the Pentagon recently accused of having $244 million in overcharges -- ''an aberration.'' Yet these rip-offs are far more common than the Pentagon pretends but not so widespread that the Pentagon has to keep doing business with thieves. Tolerating fraud in the name of national defense doesn't cut it.

It's galling that the Pentagon last month scrapped its 3-week-old ban of new GE contracts and barred only the GE division that got caught. It's unacceptable that the law made $1,040,000 the maximum fine for trying to steal $800,000. Even in hindsight, after unexpectedly getting caught, GE executives can rationalize that they made a reasonable gamble because the company's fine is only slightly more than the intended windfall.

But given that government wants to keep major contractors in business, the prime weapon against chiselers cannot be financial. People who try to rob the Pentagon are worse than bank robbers: These ugly Americans steal more because they endanger everyone who depends on American military strength. So what if they brandish computer printouts, not guns and scrawled notes. These white-collar crooks belong in prison.

It's all the more vital to straighten out defense contracts now that Congress is slowing the growth rate of the Pentagon budget. The Pentagon will be spending more next year and the year after that because there's a cushion of defense dollars left over from previous years. But at least the mad dash that has doubled the Pentagon budget is slowing, and taxpayers must start getting their money's worth.

The Pentagon is in the extraordinary business of war and peace, where the consequences of miscalculation have no clear limit. U.S. military forces have enough adversaries -- from the Soviet superpower to kamikaze terrorists. In that somber context, a dishonest contractor is a menace whose white collar should be turned into prison garb.